Top coffee brand suffers as founder’s marriage flounders

By Minh Son   June 21, 2018 | 05:00 am PT
Top coffee brand suffers as founder’s marriage flounders
A woman drives pass a coffee shop of Trung Nguyen in Ho Chi Minh City's District 4. Photo by VnExpress/Minh Nga
Estranged wife of ‘Coffee King’ started King Café to preserve his legacy because she thought the original brand was doing downhill.

In the saga of Vietnam’s top coffee brand, a rags to riches story that seemed headed for an unhappy ending, new pages are being written.

When Forbes profiled the founder of Trung Nguyen Coffee in 2012, it quoted economist Nguyen Viet Khoi as saying Dang Le Nguyen Vu’s was a classic ‘from zero to hero’ story.

Vietnam’s 'Coffee King,' as the magazine tagged him, started out in 1996 with a bicycle and a strong will. Ten years later, in 2006, Trung Nguyen Coffee was launched with a charter capital of VND1.5 trillion ($65.85 million). Twenty years later, the company was earning $260 million in annual revenues.

But the 20th year proved to be a particularly bumpy one for companies under the umbrella of Trung Nguyen Corporation JSC, the top coffee firm in Vietnam.

Rocking the boat was the rocky relationship between Vu and his wife, a senior company official.

The public knew little about Vu’s wife, Le Hoang Diep Thao, a deputy director and minority shareholder, who stayed out of the limelight.

That changed when Vu ousted her in 2015, and the couple became embroiled in a bitter ownership struggle as well as divorce proceedings. They took the issue to court, accusing each other of obstructing the company’s operations.

That year the gross profit of Trung Nguyen Instant Coffee Company JSC dropped up to just 34 percent of against that of 2014, according to Vietnam Industry Research and Consultancy (VIRAC), an industry research and consulting company that provides industry reports and analysis to both local and foreign clients.

One of the contentious issues in the legal battle between Vu and Thao is the right to control Trung Nguyen Instant Coffee Company JSC.

The dispute became official in April, 2015 when Trung Nguyen Corporation JSC (TNG) dismissed Thao from her leading positions in the company and its subsidiary. In a document sent to the court in 2015, Vu, the top executive of Trung Nguyen Group, said that while working as chair and general director of Nguyen Instant Coffee Company JSC, Thao had issued a number of documents affecting production and business activities that damaged the firm.

Thao rejected Vu’s claim and asked the court to reinstate her. She also wrote to the company’s partners, telling them that the main cause of the damage that Vu referred to did not come from her but from the dispute between the couple.

Another Trung Nguyen subsidiary, Trung Nguyen Coffee LLC, met the same fate, its net profit decreased by half over 2014.

In November 2015, Thao filed for divorce, and the case is yet to be resolved pending the settling of the corporate dispute between the husband and wife.

Soon after, Vu disappeared from the limelight, shunning the media. Instead, over the last few months, news reports began emerging of a new coffee brand entering the market. Reports said King Coffee was launched by Thao.

Last March, Thao came out of a self-imposed exile and gave an exclusive interview to local news site Soha. In that conversation, she pleaded for Vu to come out of hiding and talk to her like husband and wife.

Thao said she needed Vu as a husband and business partner, and their four children needed their father. She said founding King Coffee was her way of preserving the Vietnamese coffee brand, as she feared Trung Nguyen is going downhill.

And with Vu still incognito, she accused four leaders of Trung Nguyen Coffee for misusing their power at her husband’s company while he was away.

She said that incorrect information had been spread on social media to slander her husband, who was too sick to appear in public.

“These leaders did this to manipulate Trung Nguyen for their personal gain,” she said.

However, Trung Nguyen, which also operates in the franchise, tourism and retail sectors, has not gone downhill as Thao feared.

According to VIRAC, TNG has kept its total revenue and gross profit stable at more than VND3.8 trillion and around VND800 billion respectively in 2014, 2015 and 2016. Given the fierce competition in the local market, the stable revenue and profit was considered a success. Meanwhile, the brand’s total assets jumped from VND5 trillion in 2014 to nearly VND6.3 trillion in 2016.

Out of the blue

In an unexpected development, Vu put in a surprise appearance at a company event on Saturday, after “disappearing” for almost five years.

The CEO exhorted Trung Nguyen’s leaders and staff to do everything differently from other companies in the world.

“Brothers and sisters, you have to start by revolutionizing yourselves,” he said in a short speech.

Trung Nguyen must aim to become the number one coffee brand in the world, establishing its presence everywhere, he said.

Vu said he had spent the last five years meditating up in the mountains and now had answers to “all the questions in this world.”

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